The Chartered Institute of Building recently launched its new CIOB Contract for Complex Projects 2013. It’s aiming to be the first standard form contract specifically relating to management of time in complex construction and engineering projects but it includes a number of traps for the unwary.
The CIOB claims that current standard forms do not adequately encourage time management and fail to control the risk of time and cost escalation on major projects. Its research shows that 67 per cent of complex building projects were completed late, with 18 per cent having delays of longer than six months.
Tackling late running projects
The CPC 2013 therefore includes extensive time management provisions dealing with matters such as programming, early warning, progress reports and float in an attempt to keep tabs on any delays or escalating costs during the course of the project.
Key to this is the new role of the project time manager, who is to advise the contract administrator on time-related matters.
New CPC differs from standard from contracts
However, a number of provisions in the CPC 2013 differ from other standard forms such as the JCT and NEC3. The key points for those considering this contract include:
- The contractor can suspend on 10 business days’ notice if the employer does not provide sufficient evidence of their ability to pay.
- Some decisions of the contract administrator or project time manager are deemed to be accepted unless they are challenged within five business days.
- The employer can recover delay damages over and above the level of liquidated damages specified if the contractor does not accelerate when instructed.
- The projected outturn cost has to be calculated for each interim payment.
- The employer can terminate for convenience without any liability for the contractor’s loss of profit, provided that a third party is not employed to complete the works within 300 Business Days.
- There is no right to terminate immediately on insolvency. The notice provisions require a minimum of 10 business days between the insolvency event and the termination taking effect.
- There is no contractual right to resist payment of an interim payment due if an insolvency event occurs after the last date that a valid pay less notice could have been served.
- Issue Resolution, a form of expert determination, is a further layer in the dispute resolution procedure. The costs of an expert appointed under this procedure are to be split equally between the parties irrespective of the result and any decision will be final and binding unless referred to adjudication or arbitration within 20 business days.
The goal of reducing disputes by increasing the drive towards resolving time and cost issues contemporaneously is laudable. However, it is questionable whether it will always work.
Will it work in practice?
Disputes are most likely to arise when a large number of potential delay and disruption events occur in a relatively short timeframe.
In such a situation, the parties may not be able to keep on top of the administrative requirements of the contract when the pressure is on to complete the job. This risks the mechanism breaking down and disputes regarding time and money being left to the end.
There are also a number of different roles required for the administration of this new form, such as the contract administrator, project time manager, auditor, data security manager, design co-ordination manager and valuer.
In practice, there may be confusion as to the responsibilities of these different parties and it is doubtful whether employers will wish to bear these additional administrative costs.
In short, it will be interesting to see whether this contract becomes widely used in view of its relative complexity and high administrative burden.
Steven Carey is head of construction and engineering and James Worthington is a senior associate in the construction and engineering team at Speechly Bircham